With casino gaming stocks down 6% for the year, first-quarter earnings season kicks off this week with potential Las Vegas Strip upside, ongoing concerns about the national economy, and prediction markets cutting into digital gaming revenue.
J.P. Morgan analyst Daniel Politzer said that he saw the most potential upside and a path to improve estimates and sentiments from Las Vegas Sands, MGM Resorts International, and Wynn Resorts. Las Vegas Sands is the first of the major operators to release its earnings report on Wednesday.
“The sector remains choppy, with optimism on tax-refund upside clouded by weakening consumer sentiment and higher fuel prices,” Politzer said. “U.S. gaming stocks have fared relatively well post our mid-March (event) in Las Vegas; MGM and PENN sentiment has shifted from outright negative to being more actively debated, helped by Caesars Entertainment mergers-and-acquisition speculation.”
For the year, Bank of America reports gaming stocks are down 6%, with U.S. operators up 1%, Macau operators down 14%, and digital and online gaming stocks down 36%.
Digital remains challenging amid the prediction markets handle narrative, down 2% in the first quarter, and potential for higher customer acquisition costs. For the first quarter, Politzer said they are below consensus estimates on DraftKings and Flutter, while Rush Street should be solid.
“Prediction markets and slowing digital gaming trends continue to dominate our conversations,” added Bank of America analyst Shaun Kelley. “Our bridges are below the Street for DraftKings and FanDuel and we think 2026 numbers are also at risk. In addition to slowing online sports betting handle, there are concerns that it is starting to impact igaming as well.”
In his preview, Barry Jonas with Truist Securities said while the gaming sector “remains out of favor,” he believes regionals have the best setup into the first quarter, benefitting from players staying closer to home. He said Churchill Downs and Monarch Casino & Resort are their favorite names.
“In Vegas, Strip trends look better sequentially, but still aren’t growing, while the locals face idiosyncrasies,” Jonas said. “Digital remains challenged amidst online sports betting growth and prediction market concerns. Net-net, we foresee a largely in-line quarter with M&A – Caesars in focus as the wildcard, though macroeconomic and oil drama remains the potential spoiler.”
Politzer said MGM, Las Vegas Sands, and Wynn have “the best setups.” MGM has potential upside to first-quarter Strip estimates, as revenue per room and visitation trends “have gotten less bad.” Revenue per room is tracking up and short interest remains high, he said.
“We think the path of least resistance is for Strip estimates to move higher and at a worst case unchanged,” Politzer said. “Las Vegas Strip interest is high as investors try to parse out if we’ve turned the corner or if low-end leisure softness and geopolitical impacts (higher airfares) will keep a lid on positive revisions.”
First-quarter revenue per room is tracking up 5% versus a decline of 8% in the fourth quarter and visitation has been flat versus the fourth quarter’s 6% decline, Politzer said.
“Though gaming has been mixed, we forecast first-quarter gaming revenue down low- to mid-single digits,” Politzer said. “For the first quarter, our EBITDAR estimates for Strip operators are mostly in line as we see MGM and Caesars EBITDAR -3% year-over-year and Wynn +2% year-over-year from resilience in the high-end and group business. For the second quarter, our estimates are slightly above the Street, as we still believe Strip EBITDAR can grow in the second half of 2026.”
The first-quarter Strip EBITDAR estimates are $420 million for Caesars, $740 million for MGM, and $227 million for Wynn.
When discussing Caesars in Las Vegas, Politzer said commentary on first-quarter trends and monthly pacing of leisure demand will be important, as investors look for a bottom to Vegas-demand softness. Did first-quarter group trends meet expectations and will group trends in the second quarter drive EBITDAR growth?
Shaun Kelley said his company’s Strip first-quarter estimates are 1% above consensus, citing revenue per room and a strong convention calendar. Their room rate survey is trending up through June.
“We are slightly ahead of the Street for Las Vegas, in line for Asia, and see a mixed bag for regionals,” Kelley said. “Early March data looks weak for regionals and digital gaming, but we expect Vegas March data to be quite strong.”
Jonas said they don’t think flat occupancy and improved revenue per room are enough to offset overall softness in the leisure segment in Las Vegas with the challenges at the low end, softer international visitation, and value-perception issues.
“To their credit, operators are trying to address the value-perception issue,” Jonas said. “Both MGM and Caesars are offering all-inclusive promotion/package type deals at lower-end properties with a minimum stay required. Still, it remains to be seen what sort of upside this will yield. We continue to monitor second-quarter trends closely as the Strip begins to benefit from easier comps and a strong event/group calendar, though a volatile macro lingers.”
Jonas said Caesars is better positioned with its room survey with May rates up 43% versus 2% for MGM.
Wynn fundamentals in Las Vegas and Macau appear stable, but with the stock trading around $107, the risk versus reward “feels asymmetric,” as the Wynn Al-Marjan Island resort development under construction in the United Arab Emirates “is effectively a free-call option,” Politizer said.
Politzer said Macau fundamentals have been “decent,” with gaming revenues up 14%, but investor interest has been muted post-fourth-quarter margins, operating-expense disappointment, and tougher second-half of 2026 comps.
“Macau sentiment has been muted, with skepticism on how gaming revenue will translate into EBITDA/margins, given the elevated promo environment and recent opex step up,” Politzer said. “Looking ahead, comparisons get more difficult in June.”
As for Las Vegas Sands, Politzer said the “wound from the fourth-quarter’s miss is still open, but it’s worth acknowledging that Macau’s gaming-revenue mix has been relatively more favorable” in the first quarter with more mass versus VIP growth. Sands gaming revenue share was 110 basis points higher quarter-over-quarter since the fourth quarter miss, he said. First-quarter Macau estimates were set 6% lower.
For regional casinos and Las Vegas locals, Politzer said the “pulse of the consumer will be the focus” as gasoline prices are up 40% since February. Tax refunds are tracking +15% year-over-year. First-quarter regional gaming revenue rose 2%, but weather and weekend days “made monthly growth cadence messy,” he said.
“Exit rates and fourth-quarter trends will be topical, along with M&A appetite, given a potential Caesars deal,” Politzer said. “For Las Vegas locals, we forecast first-quarter gaming revenue +1% year-over-year. We see Boyd Gaming as having the most first-quarter upside versus the Street on the Midwest & South segment.”
Kelley said their Las Vegas locals properties are 1% below consensus, citing Red Rock losing share in the first quarter from construction disruption.
Jonas added that any negative Red Rock estimate revisions should be limited to construction disruption and seasonality, but they’re watching for any wider impact to the market from macro weakness. They lowered first-quarter earnings by negative 3% to 5% and 1% to 5% below consensus.
“Red Rock continues to manage through construction disruption, notably at Sunset Station, Green Valley Ranch, and Durango,” Jonas said. “While management quantified potential impact at Sunset and Green Valley Ranch on the fourth-quarter call, they did not for Durango, citing uncertainty as to the level of disruption. We suspect there may be some impact – minimally from nearby roadwork – and adjust our estimates accordingly. We reiterate our view that there is sizable ROI potential for ongoing construction/renovation across the portfolio.”
For Boyd, Politzer estimates adjusted EBITDAR of $323 million, up from $318 million from the consensus.
“Trends and commentary are around rated versus unrated play; the impact of new supply in certain markets and whether the aggressive promotional environment from some peers (namely Caesars) has waned; and benefits and timing of tax refund stimulus versus demand impact from higher gas prices,” Politzer said.
Jonas said they lowered Boyd’s Las Vegas locals and downtown estimates to -3% and -1%, respectively, but see it as a function of destination-related property challenges. “We think Boyd’s core locals business remains stable, while it should benefit from the recent $60 million Cadence Crossing project that opened in late March and is seeing upside in the regionals. Overall, our Boyd first-quarter total EBITDAR is +1% ahead of the Street,” Jonas said.
For digital, Politzer said estimates for DraftKings and Flutter seem high, while Rush Street should have another strong quarter. J.P. Morgan forecasts DraftKings EBITDA at $151 million versus the $174 consensus estimate, while it has Flutter at $618 million versus a $630 million consensus.
“We don’t see downside risk to fiscal-year EBITDA guides, but second-quarter numbers still seem high for Flutter and it’s tough underwriting such a strong fourth quarter,” Politzer said. “First-quarter industry handle is tracking -2% year-over-year (-4% excluding Missouri) and it’s unclear what operators can/will say that will inspire confidence that the industry is still growing and not being impacted by prediction markets.”
On a positive note, Politzer said online sports betting handle is tracking up 10% year-over-year, as the hold looks to be coming in at 9.9% versus 8.9% in the first quarter of 2025. First-quarter igaming revenue is tracking up 19%.
Price-target changes include Caesars down $1 to $35; MGM up $1 to $42; PENN up $1 to $22; Red Rock Resorts down $3 to $73; and Rush Street up $1 to $21.
Bank of America has a $100 price target for Boyd that traded at $87 on Tuesday. Bank of American has a $150 price target for Wynn. Bank of America has removed the investment opinion on Caesars’s stock, saying investors should no longer rely on its previous opinion or price objective.
“Ultimately, Caesars’s investor discussion and stock movement have been less tied to fundamentals and more on M&A speculation,” Jonas said. “We see any such deal as complex given the elevated leverage of parties involved, but we’ve said for some time that companies across the space could use creative M&A as the solution to lagging stock prices and any Caesars transaction could have wider valuation implications across the space. Of course, any Caesars deal would take time to consummate and have a sharp focus by regulators with painful memories of Harrah’s last take-private transaction.”
Among major casino operators, Boyd Gaming, Churchill Downs, and PENN report earnings Thursday. Caesars and Rush Street report next Tuesday, followed the next day by MGM and Red Rock Resorts. Wynn Resorts will release results on May 7.
